Hi, so I'm fairly new to the sell side and I had decided to do some credit spreads. On Monday I placed a bear credit spread expiring on tomorrow expecting to see flat to downward moves on NDX.
So things started a little bit bad for me, however theta decay meant I more or less was still at 0 P&L. Wednesday came and I was very careful for the CPI report, if I saw some big movements upwards I would buy to close and accept the loss. Fortunately it moved downwards so I decided to not take profit and hold a little bit longer. Unfortunately just as I stopped looking, because I met up with friends after work (I live in europe so it was the evening), it started going up. When I looked NDX made a full recovery and some more, was in the red.
I don't know if the frustration of going from green to red while I was away made me decide to roll up the spread. Welp today was a big up day as well, and before the spread got challenged I decided to close at a loss, down 50% of the risk assumed.
Even though I played with a small portion of my portfolio, it still stings having to assume the loss on of my first credit spreads. I decided to not do anything until some time has passed.
Any tips on how to deal with situations like this? General advice on spreads is appreciated as well.
Posted by Icarus7v
2 Comments
First learn how to properly trade options. Here you have a curated list of free links on the web if you are willing to increase your knowledge on options trading: https://www.myoptionsedge.com/33-blog-articles-every-options-trader-must-read
If you are willing to fasten your options trading, join a trading community that can teach you some tips and how to avoid mistakes. Options trading is difficult and avoid it if you are willing to recover your losses fast. There are good strategies out there (SPX Best Options strategy) is a conservative, Delta neutral, income-based strategy that is delivering great results… it uses longer-dated options… no guess to where the market move (unlike credit spreads) and avoid trading below 30DTE options and you will see your results improve.
If you can’t monitor, you need to set your SL and profit targets. There is no other way.